Yoder Furniture Works Yoder Furniture Works manufactures a high-quality, wooden
ID: 2422398 • Letter: Y
Question
Yoder Furniture Works
Yoder Furniture Works manufactures a high-quality, wooden rocker-recliner. A key differentiating feature of this rocker-recliner is the ease with which a hand-operated lever raises and lowers the footrest. Yoder left the prototype phase and began commercial production on January 1, 2015. A retired accountant of the founder, Steve Yoder, maintained the accounting records on a temporary basis through January 31, 2015. Now, Yoder is searching for a replacement. Potential candidates are being asked to evaluate the information from the first month of commercial operation as follows:
Cost information
Administrative expenses
$22,000
Advertising expenses
11,700
Cash account balance, January 1, 2015
0
Depreciation on production equipment and factory building
2,000
Depreciation on administrative offices
750
Insurance on production equipment and factory building
1,700
Administrative supplies expense
550
Property taxes on production equipment and factory building
425
Sales commissions
18,700
Utilities for production equipment and factory building
1,650
Wages paid to production workers
67,800
Direct materials inventory, January 1, 2015
0
Direct materials inventory, January 31, 2015
0
Direct materials purchases during January 2015
83,400
Work in process inventory, January 1, 2015
0
Work in process inventory, January 31, 2015
0
Finished goods inventory, January 1, 2015
0
Production and sales information
Units produced during January 2015
600
Units sold during January 2015
490
Sales price per unit
$500
Based on the above information, answer the following questions:
Determine the per-unit contribution margin and the contribution margin percentage.
Determine the breakeven point in units and in sales dollars.
Prepare flexible budgets for manufacturing costs for activity levels of 700 and 800 chairs per month.
Cost information
Administrative expenses
$22,000
Advertising expenses
11,700
Cash account balance, January 1, 2015
0
Depreciation on production equipment and factory building
2,000
Depreciation on administrative offices
750
Insurance on production equipment and factory building
1,700
Administrative supplies expense
550
Property taxes on production equipment and factory building
425
Sales commissions
18,700
Utilities for production equipment and factory building
1,650
Wages paid to production workers
67,800
Direct materials inventory, January 1, 2015
0
Direct materials inventory, January 31, 2015
0
Direct materials purchases during January 2015
83,400
Work in process inventory, January 1, 2015
0
Work in process inventory, January 31, 2015
0
Finished goods inventory, January 1, 2015
0
Production and sales information
Units produced during January 2015
600
Units sold during January 2015
490
Sales price per unit
$500
Explanation / Answer
1) Determine the per-unit contribution margin and the contribution margin percentage.
2) Determine the breakeven point in units and in sales dollars.
3) Prepare flexible budgets for manufacturing costs for activity levels of 700 and 800 chairs per month.
Particulars $ Sales(490Units*$500) 245000 Less: Variable Cost Sales commissions 18,700 Wages paid to production workers 67,800 Direct materials purchases during January 2015 83,400 Contribution 75,100 Contribution per unit($75,100/490 units sold) $153.27 Contribution margin percentage Contribution/Sales ($75,100/$245000.) 30.65%Related Questions
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